Intel Corporation (INTC) Q1 Earnings Preview

Intel Corporation (NASDAQ:INTC) is set to report its first quarter earnings on Tuesday, April 15 at 4:00 p.m. EDT. The announcement will be followed by a conference call beginning at 5:00 p.m. EDT to discuss results and outlook. Wall Street consensus calls for $0.37 in earnings per share on revenues of $12.81 billion. While revenues are expects to go up 1.9% from last year’s $12.59 billion, EPS is estimated to plummet from 40 cents in the same quarter last year.

Intel may beat expectations on better-than-expected PC sales

Intel Corporation (NASDAQ:INTC)’s own guidance stands at $12.3-$13.3 billion in revenue. Consistent decline in PC sales and heavy investments in new technologies have affected Intel’s revenues as well as its bottom line over the past two years. For the full year 2014, the chipmaker’s revenues are expected to grow just 1%, while earnings are likely to drop 2% from $1.89 to $1.86.

However, there is a bright spot. Recent reports suggest that PC sales are not slowing as fast as analysts were expecting. Microsoft Corporation (NASDAQ:MSFT)’s decision to end support for Windows XP has prompted corporate as well as individual users to upgrade. So, the prevailing though is that Intel Corporation (NASDAQ:INTC) will handily beat the consensus, and its Q1 revenues may surpass $13 billion. The Santa Clara-based company expects seasonal variation to affect its revenue growth in Q1. But Intel says macro situation will improve in 2014 as the industry turns to innovative form factors such as convertibles, ultrabooks and detachables.

Intel’s gross margin to be around 59%

Intel Corporation (NASDAQ:INTC) forecasts Q1 gross margins in the range of 57%-61%. Its R&D and MG&A expenditure is likely to reach $4.8 billion. For the second quarter, analysts estimate revenues of $12.95 billion. Intel shares yield 3.44%, well above the industry average of 2%. The company announced a stock buyback of $10 billion in 2011, and $6 billion in 2012. Intel began 2014 with about $3.2 billion still available for repurchases.

Last week, Intel Corporation (NASDAQ:INTC) said it will shut down its Costa Rica plant as part of its restructuring program. The move would affect 1,500 employees.

Intel Corporation (NASDAQ:INTC) shares fell 0.93% on Friday to close at $26.18.